The final increase for the minimum wage is just around the corner, and local businesses are doing what they can to prepare.
Alberta’s current minimum wage is $13.60, with the province’s final jump to $15 per hour taking effect Oct. 1.
“Right now, Alberta has the highest minimum wage in Canada,” explained executive director of the Bonnyville and District Chamber of Commerce Serina Parsons. “At $15 per hour, we’re going to be way over and above any standard that any other province is initiating in Canada.”
Studies done on the long-term economic benefits of increasing minimum wage have come back inconclusive.
For some local business owners, there’s a fear that the provincial government’s decision could result in a rise in products and services, in order to cover the additional cost of paying staff.
“We’ve noticed that small businesses are really kind of having a negative impact from these large growths in minimum wages over the last three years,” Parsons said, adding the cost for the average employee will increase by 285 per cent once the new wage comes into effect.
The steady increase of minimum wage over the years has prepared local businesses for the final $15 per hour cost. Some local businesses have used this time to prepare for the upcoming hike.
“We did some (price adjustments) at the last minimum wage increase, but we haven’t really done any big impact on this one,” noted James Richer, owner of the Bonnyville McDonald’s. “I know different owners are looking to do different things in October, and if I do something, it won’t be something really drastic.”
Richer’s waiting six months after the wage jump to see how it will impact his profits.
President of the Cold Lake Regional Chamber of Commerce Ben Fadeyiw said some area businesses will be expecting more from employees, and may not be as inclined to hire younger staff.
“Some of the bad parts are for students. If you had a student $11 an hour, and they’re working up toward their first job and they’re learning. At $15 an hour, people are going to think twice about hiring that student because he’s taking longer, costing them more and they’re going to give more hours to their employees as it is now. They won’t give the chance to that student to learn, and have some life experience of work,” he explained.
Jennie Hamel, owner of Jennie’s Diner and Bakery, said her biggest problem with the minimum increase is having to pay younger employees, with minimal to no expenses, the same as someone who has bills to pay.
“I have a lot of high school students here who have no bills – it’s just money in their pocket, and half these kids don’t know what to do with that money,” she explained.
For some employers, it’s not only paying younger or less experienced employees the same wage as others that’s the issue. The hike could mean there are less jobs available at all.
“In some cases, small businesses may feel the shift of eliminating some employees, and that’s the bad part,” detailed Fadeyiw.
While businesses have voiced their apprehensions toward the increase, the provincial government has expressed their beliefs that the jump will reduce the amount of poverty.
“In their perspective, it’s decreasing poverty. But, what’s actually happening is with that minimum wage it’s more complex than just decreasing poverty. What’s happening is some businesses are doing more with less,” Parsons explained.
While employees will see more compensation for their work, the $15 per hour wage could mean they fit within a new tax bracket.
Fadeyiw explained, “Initially, when you look at your cheque, the gross income might (be positive). But, I’m not sure how the tax part will increase, because it puts you into a different tax bracket and they’ll tax you a little more… With the minimum wage, everything else will increase, as well. I’m really unsure about it.”
No matter what business owners think, the 254,000 minimum wage workers in Alberta are also getting a raise come October.
“Businesses are going to do what they’re regulated to do, and what they need to do. They’re not looking to reduce the minimum wage back to $7 an hour, that’s not going to benefit anybody. But they’re worried about how they’re going to recoup that cost. They’re worried about having a sufficient number of employees, and paying them that amount within their budget,” explained Parsons.
Hamel said, “On Oct. 1, we’ll change our payroll and continue on.”